Congressional Court Watcher: Recent Appellate Decisions of Interest to Lawmakers (April 8–April 14, 2024)

Legal Sidebari

Congressional Court Watcher: Recent

Appellate Decisions of Interest to Lawmakers

(April 8–April 14, 2024)

April 15, 2024

The federal courts issue hundreds of decisions every week in cases involving diverse legal disputes. This

Sidebar series selects decisions from the past week that may be of particular interest to federal lawmakers,

focusing on orders and decisions of the Supreme Court and precedential decisions of the courts of appeals

for the thirteen federal circuits. Selected cases typically involve the interpretation or validity of federal

statutes and regulations, or constitutional issues relevant to Congress’s lawmaking and oversight

functions.

Some cases identified in this Sidebar, or the legal questions they address, are examined in other CRS

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Decisions of the Supreme Court

Last week, the Supreme Court issued three decisions in cases where it had heard arguments:

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Arbitration: In a 9-0 decision, the Court held that the exemption in Section 1 of

the Federal Arbitration Act (FAA) for transportation workers engaged in foreign or

interstate commerce extends to workers engaged in interstate transportation, regardless of

whether their employer is in the transportation industry. In this case, the Court agreed that

truck drivers for a baked goods company fell under the FAA’s exemption, and thus the

arbitration clauses in their employment contracts with the company were not enforceable

under the FAA (Bissonnette v. LePage Bakeries Park St., LLC).

Property: The Court unanimously ruled that the Nollan/Dolan test, used to assess

whether a building permit exaction is an unconstitutional taking, applies regardless of

whether the permitting condition is established administratively or through legislation

(Sheetz v. Cnty. of El Dorado).

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Securities: In a 9-0 decision, the Court held that regulations implementing Section 10(b)

of the Securities Exchange Act of 1934, which make it unlawful to omit material facts in

connection with buying or selling securities, do not apply to all omissions but only those

rendering the speaker’s affirmative statements misleading (Macquarie Infrastructure

Corp. v. Moab Partners, L.P.).

Decisions of the U.S. Court of Appeals

Topic headings marked with an asterisk (*) indicate cases where the appellate court’s controlling opinion

recognizes a split among the federal appellate courts on a key legal issue resolved in the opinion,

contributing to a non-uniform application of the law among the circuits.

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Arbitration: The Ninth Circuit held Section 1 of the FAA, which exempts from coverage

arbitration clauses in employment contracts for transportation workers involved in

interstate or foreign commerce, does not apply to arbitration clauses in contracts between

corporate entities regarding the provision of transportation services. As a result, the

arbitration clauses between business entities providing for local delivery services were

enforceable. The ruling aligns with recent decisions by the Fourth and Sixth Circuits (FliLo Falcon LLC v. Amazon.com, Inc.).

Criminal Law & Procedure: The D.C. Circuit upheld a criminal defendant’s conviction

under 40 U.S.C. § 5104(e)(2)(G) for demonstrating in a U.S. Capitol building in

connection with the events on January 6, 2021. The court rejected the defendant’s claims

that the law’s prohibition on parading, demonstrating, or picketing in Capitol buildings

was facially overbroad in violation of the First Amendment and void for vagueness in

violation of the Fifth Amendment’s Due Process Clause (United States v. Nassif).

Criminal Law & Procedure: The Ninth Circuit vacated several criminal defendants’

convictions for mail fraud under 18 U.S.C. § 1341 and conspiracy to commit mail fraud

under 18 U.S.C. § 1349 where the defendants had deceived businesses into purchasing

print toner by falsely implying that they were the businesses’ regular toner suppliers. The

panel held that the jury instructions were overbroad because they permitted the

government to convict by showing that the businesses were deceived into entering an

agreement with the defendants. Instead, the panel held that the government needed to

show that the deception went to the nature of the bargain, such as with respect to the

price, quantity, or quality of the goods being sold (United States v. Milheiser).

Environmental Law: In a per curiam opinion, a D.C. Circuit panel rejected a challenge

by several states and private parties to a 2022 Environmental Protection Agency (EPA)

decision—which reinstated a decision withdrawn in 2019—that waives federal

preemption of California zero-emission regulations for certain automobiles under Section

209 of the Clean Air Act (CAA). While most of the plaintiffs’ challenges were dismissed

on standing grounds, the panel reached the states’ argument that the EPA’s decision to

grant a CAA waiver to California violated other states’ right to equal sovereignty by

leaving them less authority to regulate auto emissions than California. The panel rejected

this challenge, observing that constitutional challenges to federal statutes based on equal

sovereignty claims only had been recognized in narrow circumstances not applicable here

(e.g., electoral representation). The panel held that equal sovereignty considerations do

not categorically limit Congress’s power to regulate interstate commerce, including

through legislation like the CAA (Ohio v. EPA).

Food & Drug: The Fourth Circuit upheld a Centers for Medicare and Medicaid Services

(CMS) regulation broadening the scope of covered “line-extension” drugs under the

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Medicaid Drug Rebate Program. The Social Security Act requires participating drug

manufacturers that increase prices for certain drugs faster than inflation to reimburse

Medicaid for the difference. The reimbursement rate for a line-extension drug—defined

by statute to include a “new formulation” of an existing drug—factors in not only the

price increase of the line-extension drug itself but also the price increase of the drug in its

original form. The circuit panel held that CMS’s regulatory definitions of “lineextension” and “new formulation”—which covered some drugs with different release

mechanisms, ingredients, or strengths than the original drug—fell within the scope of the

governing statute (Vanda Pharms, Inc. v. CMS).

Tax: In a per curiam opinion, the Seventh Circuit directed a district court to grant the

government’s request for an injunction requiring the defendants to pay the United States

future taxes owed. While the lower court had rendered judgment in favor of the United

States for back taxes owed by the defendants, it declined to issue an injunction directing

the defendants to pay their future taxes before paying their creditors. The government had

requested relief under 26 U.S.C. § 7402(a), which permits “orders of injunction ... as may

be necessary or appropriate for the enforcement of the internal revenue laws.” The district

court reasoned that the government did not satisfy the traditional requirements for

injunctive relief, as it had not shown it would face irreparable harm from the loss of

future revenue absent the injunction. While the circuit panel declined to decide whether

traditional injunctive relief factors apply to Section 7402(a), it held that Treasury's injury

from a continuation of the defendants’ conduct was enough to satisfy the irreparable harm

requirement, and that requiring a showing of additional injury, such as insolvency of the

national government, would render the statute ineffectual (United States v. Olson).

Tax: The Tenth Circuit held that the requirements that the Internal Revenue Service must

satisfy to initiate church tax inquiries and examinations under 26 U.S.C. § 7611, the

Church Audit Procedures Act, do not apply to third-party summons of churches’ bank

records under 26 U.S.C. § 7609. The court held that there is no hybrid set of requirements

governing the summons of a church’s records held by a third party, even if the summons

is made in connection with an inquiry or examination that would be governed by Section

7611 (God’s Storehouse Topeka Church v. United States).

Author Information

Michael John Garcia

Deputy Assistant Director/ALD

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Congressional Research Service

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Disclaimer

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